"At War with the Weather"

At War with the Weather (MIT Press, paperback 2011)  is a groundbreaking examination of how we think about catastrophes, (mis)manage risks, and how financial recovery from natural disasters in the United States
must radically change.

Winner of the 2011 Kulp-Wright Book Award presented by the American Risk and Insurance Association for the most influential text published on the economics of risk management and insurance.

More information at: www.atwarwiththeweather.com.

View video for "At War with the Weather." 


LEADERSHIP DISPATCHES: Chile's Extraordinary Comeback from Disaster

by Michael Useem, Howard Kunreuther and Erwann Michel-Kerjan

In the early hours of February 27, 2010, a powerful earthquake rocked Chile for nearly two minutes. At Mw 8.8, it was the eighth largest seismic event of the modern era, five hundred times more powerful than the quake just six weeks earlier that had killed more than a quarter million in Haiti. The F27 event in Chile devastated homes, schools, hospitals, roads and telecommunications, paralyzing the country for days. The damage was equal to 18 percent of Chile’s GDP, the equivalent of a $2.7 trillion loss in the U.S., more than twenty times greater than that caused by Hurricane Katrina in 2005. Yet Chile’s death toll was 600 times less than Haiti’s, and the economy was fully back on track with six percent annual GDP growth the following year. How? From the outset, the Chilean President insisted that the country think strategically and act deliberatively, that it go beyond what they had already done to reduce losses from future earthquakes. The decisions and actions taken by the nation’s leaders in the days that followed the quake and the nation’s traditions and culture facilitated the implementation of policies that addressed both the immediate recovery needs and long-term planning.

Stanford University Press, 2015.  ISBN: 9780804793872.  256 pp. More information online at  http://sup.org/book.cgi?id=25059


TRIA after 2014
The Terrorism Risk Insurance Act (TRIA) is up for renewal and currently under debate in Congress. The Wharton Risk Management Center's report on “TRIA After 2014: Examining Risk Sharing Under Current and Alternative Designs” builds on data drawn from over 750 insurers across the United States by analyzing terrorist attack simulations in partnership with the risk modeling firm, Risk Management Solutions (RMS), in four cities: Chicago, Houston, Los Angeles and New York City.
The report is available here: TRIA after 2014 - full report; TRIA after 2014 - executive summary; Press Release; Penn-Wharton Public Policy Initiative issue brief TRIA after 2014

Lloyd's presents prestigious Science of Risk Prize to Wharton's Michel-Kerjan for his work on climate change
The award recognizes Michel-Kerjan’s work on Evaluating Flood Resilience Strategies for Coastal Megacities, published this year in Science, which was jointly undertaken with Jeroen Aerts, Wouter Botzen, Hans de Moel (VU University, Amsterdam), Kerry Emanuel (MIT) and Ning Lin (Princeton University).

The National Flood Insurance Program: The Way Forward
March 7, 2014 |  Location: Rayburn House Office Building, Room 2103
This event will address the important role that the National Flood Insurance Reform Act can play in establishing a financially sound system for disaster insurance, and propose concrete ways to overcome the challenges to its implementation. The debate about the future of the NFIP has intensified in Congress in recent weeks. After sharing their recent research findings, the speakers will open the floor to discuss what steps can be taken to reduce harm, deal with the affordability issue and increase resiliency. They will also focus on the economic impacts triggered by these catastrophes and who should pay for mitigating losses.
To download a copy of the Penn - Wharton Public Policy Initiative issue brief, “Implementing the National Flood Insurance Reform Act in a New Era of Catastrophes,” click HERE.

The U.S. Senate Committee on Banking, Housing, and Urban Affairs met in open session on September 25, 2013, to conduct a hearing on “Reauthorizing TRIA: The State of the Terrorism Risk Insurance Market.” The Wharton Risk Center’s Erwann Michel-Kerjan was one of the three witnesses to testify, noting that reauthorization for modifying TRIA could be accomplished without disrupting the market, and that allowing TRIA to expire would increase taxpayers’ financial exposure in the event of a terrorist attack.

The Wharton School of the University of Pennsylvania Announces Multi-Year Cooperation with Zurich Insurance Group for Flood Resilience Research

Philadelphia, PA, July 23, 2013—The Wharton School of the University of Pennsylvania is pleased to announce a multi-year academic cooperation between the School’s Risk Management and Decision Processes Center and Zurich Insurance Group (Zurich) to develop key initiatives and research focused on flood resilience. Funding for this initiative will be provided by the Z Zurich Foundation.










Addressing Affordability in the National Flood Insurance Program
The President signed the Biggert-Waters Flood Insurance Reform Act with overwhelming bipartisan support from Congress. This bill included provisions for risk-based pricing for flood insurance to improve the NFIP’s financial basis. Some legislators are now wavering on their commitment to risk-based pricing because of concerns their constituents will not be able to afford flood insurance. We propose a means-tested voucher program coupled with a loan program for investments in loss reduction measures, made affordable by reductions in the NFIP risk-based premiums.


How long do homeowners keep their flood insurance coverage?  
The average tenure of flood insurance in the U.S. is between 2 and 4 years. 



TRIA at Ten Years: The Future of the Terrorism Risk Insurance Program, House Committee on Financial Services, September 11, 2012. Erwann Michel-Kerjan testified about options to encourage private sector participation in terrorism risk insurance.

The Wharton School announces $1.25 million gift from the Travelers Companies, Inc. to establish the Travelers/Wharton Partnership for Risk Management and Leadership Fund. More »


The Faulty ‘Mental Models’ That Lead to Poor Disaster Preparation
Robert Meyer, marketing professor and co-director of the Wharton Risk Management and Decision Processes Center explains to Knowledge@Wharton why most people fail to adequately understand the threats they face as a result of natural and other disasters, and often those poor “mental models” lead to insufficient preparation.  July 7, 2014







"Helping Small Businesses Weather Economic Challenges and Natural Disasters." U.S. Senate Committee on Small Business and Entrepreneurship. March 14, 2013









Howard Kunreuther and Jim Cantore. World Economic Forum, Davos. January 2013 

G20: Disaster Risk Management as Key Priority. September 21, 2012.  Keynote (PDF)Video.


Global Risks 2012 - Erwann Michel-Kerjan

Relevance to the private and public sectors


Global Risks 2012 - Howard Kunreuther
Globalization and the results of interconnectedness



Introduction Directors Featured Articles Newsletter

For three decades, the Risk Management and Decision Processes Center at the Wharton School of the University of Pennsylvania has been at the forefront of basic and applied research to promote effective corporate and public policies for low-probability events with potentially catastrophic consequences. The Wharton Risk Center has focused on natural and technological hazards through the integration of risk assessment and risk perception with risk management strategies. After the attacks of September 11, 2001, research activities were extended to include national security issues (e.g., terrorism risk insurance, protection of critical infrastructure).

Building on the disciplines of economics, finance, insurance, marketing, psychology and decision sciences, the Center's research program is oriented around descriptive and prescriptive analyses. Descriptive research focuses on how individuals and organizations interact and make decisions regarding the management of risk under existing institutional arrangements. Prescriptive analyses propose ways that individuals and organizations, both private and governmental, can make better decisions regarding risk.

The Center supports and undertakes field and experimental studies of risk and uncertainty to better understand the linkage between descriptive and prescriptive approaches under various regulatory and market conditions.

In the past several years, the Center has significantly increased its size to now include 70 faculty, research fellows, students and visiting scholars from all over the world to undertake large-scale initiatives. Providing expertise and a neutral environment for discussion, the Center team is also concerned with training decision makers and promoting a dialogue among industry, government, interest groups and academics through its research and policy publications and through sponsored seminars, roundtables and forums. Our newsletter and issue briefs provide updates of Center activities and publications.

For analysis of financing and management of large-scale catastrophes, contact the Wharton Risk Center's directors: Howard Kunreuther, kunreuther@wharton.upenn.edu; Robert Meyer, meyerr@wharton.upenn.edu; Erwann Michel-Kerjan, erwannmk@wharton.upenn.edu.


TRIA after 2014



The Terrorism Risk Insurance Act (TRIA) is set to expire at the end of 2014 and is currently under debate in Congress. The full Senate passed S. 2244 in July 2014; the House Financial Services Committee passed H.R. 4871 in June 2014. These bills would modify the current program in different ways.

TRIA affects all corporations in America, large and small.  This report analyzes the impact of loss-sharing for the different stakeholders under the current program and proposed designs. Our analysis builds on data drawn from over 750 insurers across the United States by analyzing terrorist attack simulations in partnership with the risk modeling firm, Risk Management Solutions, in four states of the U.S.: California, Illinois, New York, and Texas.

Executive Summary (PDF)

Issue Brief (PDF)

Op-ed in CNBC  (PDF)

Press Release (webpage)


Insurance and Behavioral Economics: Improving Decisions in the Most Misunderstood Industry


by Howard Kunreuther, Mark V. Pauly and Stacey McMorrow
Cambridge University Press, 2013

Book flyer

Excerpt: "Addressing the Disconnect -- Factors that motivate consumers, carriers and regulators in their decisions about insurance." Best's Review January 2013

Podcast, Knowledge@Wharton, December 2013








Video (3 minutes) Howard Kunreuther and Mark Pauly discuss their book "Insurance and Behavioral Economics" and ways to make insurance concepts more meaningful.

Video (2 minutes) Howard Kunreuther and Mark Pauly's "Conversations on Insurance and Behavioral Economics."




Risk Regulation Seminars:  
The Wharton Risk Management and Decision Processes Center, in conjunction with the Penn Program on Regulation, and Program on Law, the Environment and the Economy, with support from the Office of the Provost, hosts an interdisciplinary seminar series on risk regulation. Additional information is available on the seminar website.

Spring 2015 Risk Regulation Seminar Series

Tuesday, February 24, 2015
4:30-6:00 pm | room TBA
LEADERSHIP DISPATCHES: Chile’s Extraordinary Comeback from Disaster

Michael Useem, William and Jaclyn Egan Professor of Management and Director of the Center for Leadership and Change Management, Wharton School, University of Pennsylvania.
Howard Kunreuther, James G. Dinan Professor of Decision Sciences and Public Policy, and Co-Director, Center for Risk Management and Decision Processes, Wharton School.
Erwann O. Michel-Kerjan, Executive Director, Center for Risk Management and Decision Processes, Wharton School, and Chairman of the OECD Secretary General Board on Financial Management of Catastrophes.

Imagine you are the newly elected president of your country, waiting to enter office. Just ten days before your inauguration, a massive 8.8 earthquake rocked your country. It was the sixth largest seismic event of the modern era, five hundred times more powerful than the quake that had killed more than a quarter million in Haiti just six week earlier. How do you prepare for the recovery process? How do you bring your country back on track rapidly?


Mike Useem, Howard Kunreuther and Erwann Michel-Kerjan will describe how the President of Chile did just that after the February 2010 Maule earthquake. The trio had access to the president, his cabinet, and leaders from the private and civic sectors who all took part in this remarkable recovery. The story of Chile’s rapid revival has just been published as a book entitled Leadership Dispatches: Chile’s Extraordinary Comeback from Disaster by Stanford University Press. http://sup.org/book.cgi?id=25059.


Fall 2014 Risk Regulation Seminar Series

Tuesday, October 21, 2014

How Do Bank Regulators Determine Capital Adequacy Regulations?
Eric Posner, Kirkland and Ellis Distinguished Service Professor, University of Chicago Law School


Tuesday, November 18, 2014

Panel Discussion on EPA's Climate Action Plan
Joel Beauvais, Associate Administrator for the Office of Policy, United States Environmental Protection Agency
Dallas Burtraw, Darius Gaskins Senior Fellow and Associate Director, Center for Climate and Electricity Policy, Resources for the Future
Tomás Carbonell, Attorney, Environmental Defense Fund
Jeffrey R. Holmstead, Former EPA Assistant Administrator for Air and Radiation
Moderated by Cary Coglianese, Edward B. Shils Professor of Law and Director, Penn Program on Regulation, University of Pennsylvania Law School

In the wake of a groundbreaking agreement between China and the United States to reduce greenhouse gas emissions, climate change action appears to be gaining political momentum in the lead-up to a major international climate meeting in Paris in 2015. The agreement with China commits the United States to a variety of initiatives to promote innovation and echoes President Obama’s “Climate Action Plan” in setting an ambitious goal to reduce economy-wide emissions by 26-28 percent of 2005 levels by 2025.  Starting the conversation, Joel Beauvais, current Associate Administrator for the EPA’s Office of Policy, presented an informative outline of the EPA’s climate change initiatives, focusing particularly on the Clean Power Plan proposal.


Tuesday, December 9, 2014

Cybersecurity and Law Enforcement Back Doors
4:30-6:00 pm | G50, Huntsman Hall, 3730 Walnut Street

Jeffrey Vagle, Lecturer in Law and Executive Director of the Center for Technology, Innovation and Competition at the University of Pennsylvania Law School
Matt Blaze, Associate Professor of Computer and Information Science at the School of Engineering and Applied Science at the University of Pennsylvania
Moderated by Howard Kunreuther, James G. Dinan Professor of Decision Sciences & Public Policy; Co-Director, Risk Management and Decision Processes Center, Wharton School, University of Pennsylvania

This panel will explore the legal and technical issues surrounding the difficult policy question regarding law enforcement agencies’ ability to bypass software security to gain access to user data. Cybersecurity experts, such as those on this panel, agree that the creation of security “back doors” carries a significant risk of weakening system security in unexpected ways. In other words, laws or policies that allow back door access by the government can easily become a vector for criminals and foreign intelligence agencies to hack into government, commercial, and individual computer systems and networks.
View seminar video  


Spring 2014 Risk Regulation Seminar Series

Tuesday, February 18, 2014
Does Regulation Kill Jobs?
4:30-6:00 pm | G50 Huntsman Hall, Wharton School
Richard L. Revesz, Dean Emeritus and Lawrence Kind Professor of Law, New York University
Sarah L. Stafford, Professor of Economics, Public Policy and Law, College of William & Mary
Cary Coglianese, Director, Penn Program on Regulation; Edward B. Shils Professor of Law, University of Pennsylvania
Adam Finkel, Executive Director, Penn Program on Regulation, University of Pennsylvania

Tuesday, March 4, 2014
A Conversation with the OIRA Administrator
4:30-6:00 pm | Penn Law
Hon. Howard Shelanski, Administrator, Office of Information and Regulatory Affairs


Tuesday, March 25, 2014
How Well is Obamacare Working?: A Panel Discussion
4:30-6:00 pm | G50 Huntsman Hall, Wharton School
Tom Baker, Measey Professor of Law and Health Sciences, Penn Law
Mark Duggan, Rowan Family Foundation Professor, Wharton School
Mark V. Pauly, Bendheim Professor, Wharton School

The Affordable Care Act has been fraught with controversy and conflict, but its implementation nevertheless moves forward in an effort to achieve the objectives set by President Obama and the law’s proponents in Congress. This seminar will provide a basis for taking stock of Obamacare at its fourth anniversary. Featuring the latest research on the law’s implementation and impacts produced by three of the nation’s foremost authorities on health care and insurance policy, the seminar will consider how states have responded to health care reform, what impacts Obamacare is having on small businesses and insurers, and how the law and its implementation might be improved.



Fall 2013 Risk Regulation Seminar Series

Monday, October 14, 2013
Risk and Opportunity: Managing Risk for Development (video)
Seminar Explores Risk Management as Instrument for Economic Development (RegBlog.org)  
Norman Loayza, Director, 2014 World Development Report, World Bank
Stéphane Hallegatte, Senior Economist, World Bank
Kyla Wethli, Core Team, 2014 World Development Report, World Bank
Moderator: Erwann Michel-Kerjan, Wharton School

Tuesday, November 12, 2013
Learning from Hurricane Sandy: A Panel Discussion on Reducing Future Disaster Losses (video) 
Seminar Explores New Responses to Flood Risks (RegBlog.org)
Katherine Greig, NYC Mayor's Office
Sean Kevelighan, Zurich NA
Marion McFadden, HUD
Roy Wright, FEMA
Moderator: Howard Kunreuther, Wharton School

Expert panel discussion on steps that are being taken to reduce losses from hurricanes and floods. The National Flood Insurance Reform Act of 2012, which passed three months before Hurricane Sandy, offers an opportunity to address how we can reduce future losses while providing better financial protection to disaster victims. But there are challenges in getting individuals to take these steps prior to a disaster, and affordability issues threaten to delay the implementation of key features of this legislation.


Tuesday, December 3, 2013
The Promise and Limits of Private Power: Promoting Labor Standards in a Global Economy

Richard M. Locke, Howard Swearer Director, Thomas J. Watson Jr. Institute for International Studies; Professor, Department of Political Science, Brown University
Moderator: Cary Coglianese, Penn Law


Wharton Risk Management and Decision Processes Center
500 Jon M. Huntsman Hall
3730 Walnut Street
Philadelphia, PA 19104
(215) 898-5688
Fax: (215) 573-2130